Standard Bank is waiting for further environmental and financial clarifications about the East African Crude Oil Pipeline, expected in about two months, before it decides whether it will invest up to $120-million in the controversial project, Kenny Fihla, Standard Bank’s CEO of corporate and investment banking, told Daily Maverick at its Climate Summit on Wednesday. 

“What we’ve been asked to do is to consider a possible participation of anything between $100-million and $120-million, which would be just under 10% of the debt funding,” Fihla said.

“We have evaluated the project, we have looked at the financials and we think it is financially viable and hugely profitable. We have looked at the economic impact; how many jobs have been created and whether it is net positive for both the economies — we are comfortable with that,” Fihla said. 

The East African Crude Oil Pipeline will run for nearly 1,500km from Uganda’s Lake Albert oilfields to the port of Tanga in Tanzania. The project is already in development and the development of airports, road infrastructure and the drilling of oil has commenced. The insulated pipeline will run underground along with six pumping stations, two in Uganda and four in Tanzania. 

Controversy has surrounded the project, with many activists around the world, alongside some displaced residents, raising concerns.

Many people have been moved from their homes; some have been compensated, others not. Local and international activists have also raised concerns about the environmental impact of the project. This is particularly apposite in light of the Intergovernmental Panel on Climate Change’s (IPCC’s) closing report of the sixth assessment cycle that said fossil fuel exploration should come to an immediate end. 

Read more in Daily Maverick: The need for action on the climate crisis is more urgent than previously assessed – IPCC

Fihla said Standard Bank had engaged with the East African Crude Oil Pipeline’s environmental impact assessments and was satisfied with 95% of the information, particularly around risk mitigation, types of technology and spillage mechanisms. 

“But there are other elements of environmental impact — the vegetation, the impact on the flora and fauna over a period of time, during construction, and whether the land can be rehabilitated fully. We’ve also raised questions about proximity to some of the waterways. Answers to those kinds of questions have been provided but we’ve asked for more information,” Fihla said.

He added that answers to these questions would be provided in about two months and that the bank’s consultants were looking at long-term data to ensure the impact assessments were accurate. 

Read more in Daily Maverick: Activists say ‘no more soft approach’ to climate change, need more from Standard Bank

The executive said the bank was also waiting for financial close, as it wanted to be certain that the equity portion of the finance was indeed available and that there were firm commitments to ensure that the bank would not extend what it was willing to commit. The bank also wanted to ensure that the project could raise its debt. 

“If these two decisions are resolved to our satisfaction then we will come to a positive decision. But if any of them are dealt with unsatisfactorily, naturally we will not commit,” Fihla said. 

Asked whether there was any concern about the East African Crude Oil Pipeline continuing the legacy of destruction caused by fossil fuel projects across the continent, Fihla said, “These are genuine concerns, no doubt about it. If you look at the oil in Angola, Nigeria, Ghana — many of the developing countries, barring the Middle East where the benefits have flown into those communities; though the dynamics are different … I don’t think those concerns alone are enough to say there should be no further development. 

“Effectively you are saying that because the previous government stole, you’ll be condemned to underdevelopment and poverty forever. I don’t think those concerns should lead to that conclusion. In fact, that would be the wrong and most destructive conclusion to the African continent, because it means there should never be development because we have corrupt governments who abuse the funds,” Fihla said. 

Tracey Davies, the executive director of the non-profit shareholder activist group Just Share, told Daily Maverick that because the bank’s climate policy was not aligned with the IPCC’s science, there was room for the bank to continue to invest in fossil fuel projects. 

“[Their climate policy] does allow them to invest in new oil and gas but the conclusion one should reach from that is that it is a flawed climate policy because if you have a policy that allows you to massively increase your investment in oil and gas, it’s not a climate policy, it’s a fossil fuel investment policy.

“The benefits of this are not going back to the Ugandan people because they never have and they never will. This is a pipeline that is taking oil out of Africa. It is not going to improve energy access for Africans. It is not going to improve the lives of the average Ugandan because Uganda is one of the most corrupt countries in Africa.

“And it’s not going to improve energy access for Ugandans. So how can one possibly justify [this] on top of all the devastation, the environmental devastation, the biodiversity-related devastation, never mind the climate impacts of this oil?” DM